The Department of Defense (DoD) submitted the Navy’s 2015 shipbuilding plan, which covers fiscal years 2015 to 2044, to the Congress in July 2014. The total costs of carrying out the 2015 plan – an average of about $21 billion in 2014 dollars per year over the next 30 years – would be one-third higher than the funding amounts that the Navy has received in recent decades, the Congressional Budget Office (CBO) estimates.
The Navy’s 2015 shipbuilding plan is very similar, but not identical, to its 2014 plan with respect to the Navy’s total inventory goal for battle force ships, the number and types of ships the Navy would purchase, and the proposed funding to implement the plans.
The 2015 shipbuilding plan states that the Navy’s goal is to have 11 aircraft carriers. The Navy intends to buy six CVN-78 Gerald R. Ford class aircraft carriers over the 2015-2044 period. Building one carrier every five years (referred to as five-year centers) would enable the Navy to have a force of at least 11 carriers almost continuously through 2044, with two exceptions. One exception would be from 2015 to 2016, when the number of carriers would be 10. That temporary decline occurs because the Enterprise (CVN-65) was retired in early 2013 after 52 years of service, and the next new carrier, the Gerald R. Ford (CVN-78), will not be commissioned until 2016. Any delays in completing that new carrier would extend the period during which the Navy has only 10 carriers. The other exception would be from 2040 to 2044 and beyond. If carriers continued to be built every five years and to serve for 50 years, the Navy’s carrier force would fall to 10 in 2040 and remain at that level.
The next carrier following the CVN-78 will be the CVN-79, the John F. Kennedy. Funding for that ship began in 2007, the Congress officially authorized its construction in 2013, and appropriations for it are expected to be complete by 2018. The Navy estimates that the ship will cost $11.5 billion in nominal dollars ($160 million more than the estimate under the President’s 2014 budget) and $10.6 billion in 2014 dollars. In its selected acquisition report on the CVN-79, the Navy describes its cost estimate as an «aggressive but achievable target». In contrast, CBO estimates that the cost of the ship will be $12.6 billion in nominal dollars and $11.5 billion in 2014 dollars, about 8 percent more than the Navy’s estimate.
Ohio Replacement Ballistic Missile Submarines
SSBNs carry Trident ballistic missiles and are the sea-based leg of the United States’ strategic triad for delivering nuclear weapons. (The other two legs are land-based intercontinental ballistic missiles and manned strategic bombers.) The design, cost, and capabilities of the Ohio Replacement submarine class are among the most significant uncertainties in the Navy’s and CBO’s analyses of the cost of future shipbuilding. Under the 2015 plan, the first Ohio Replacement submarine – sometimes called the SSBN(X) – would be purchased in 2021, although advance procurement funds would be needed starting in 2016 for items with long lead times. The second submarine would be purchased in 2024, followed by one per year from 2026 to 2035.
The Navy currently estimates the cost of the first Ohio Replacement submarine at $12.4 billion in 2014 dollars. The estimated average cost of follow-on ships is now $6.0 billion, which implies a total cost for 12 submarines of $79 billion, or an average of $6.6 billion each. However, the Navy has stated an objective of reducing that $6.0 billion figure to $5.5 billion.
Under the 2015 plan, the Navy would buy 31 Virginia class attack submarines. Between 2015 and 2033, those purchases would occur mostly at a rate alternating between one and two per year. In 2034, the Navy would switch to an improved Virginia class but maintain the same build rate of one or two per year. With such a procurement schedule, the attack submarine force would remain at or above the Navy’s goal of 48 submarines through 2024 but would then fall to between 41 and 47 submarines between 2025 and 2034 before reaching or exceeding 48 submarines again beginning in 2035.
Senior Navy leaders have stated that Virginia class SSNs would have to cost $2.8 billion or less apiece for the Navy to be able to afford 2 per year.24 The President’s 2015 budget indicates a current cost of those vessels of $2.6 billion each. For the entirety of the Virginia class under the 2015 shipbuilding plan, the Navy’s and CBO’s estimates are virtually the same: The Navy estimates that the total cost for all 31 of the Virginia class submarines purchased between 2015 and 2044 would be about $88 billion, and CBO estimates that cost at $90 billion.
Large Surface Combatants
The Navy’s 2015 plan incorporates the purchase of the same types of destroyers as the 2014 plan. The service restarted production of DDG-51 Flight IIA destroyers in 2010 and purchased eight ships through 2014 (in addition to the 62 ships that had been purchased when production was initially stopped in 2005). The Navy plans to purchase three more DDG-51 Flight IIAs through 2016. Beginning in 2016 and continuing through 2029, the Navy plans to purchase 27 DDG-51s with an upgraded design, a configuration known as Flight III. In 2030, the Navy would start buying 33 DDG(X)s, a not-yetdesigned destroyer intended to replace the DDG-51 class.
Like the Navy’s 2014 shipbuilding plan, the current plan includes a future class of destroyers intended to replace the DDG-51 Flight I and II ships when they retire in the late 2020s and 2030s.31 The Navy’s 2015 plan describes the ship as a «mid-sized future surface combatant» but does not provide further specification.32 CBO has adopted a generic DDG(X) designation, implying an unknown design.
Under the 2015 plan, production of the DDG(X) would start in 2030, which would make it a successor to the DDG-51 Flight III program. The Navy says that it would buy 35 DDG(X)s at an average cost of $1.8 billion, or about $200 million more than the cost of DDG-51 Flight III ships. Those cost estimates imply that the DDG(X)’s capabilities would represent a relatively modest improvement over those of the DDG-51 Flight III or (if capabilities were significantly improved) the DDG(X) would be a smaller ship than the DDG-51 Flight III.
The large amount of uncertainty about the ultimate size and capabilities of the DDG(X) suggests that the true cost could be substantially different from either the Navy’s or CBO’s estimate.
Littoral Combat Ships
In the 2015 plan, the Navy envisions building a force of 52 small surface combatants called littoral combat ships by 2025. The first LCS was authorized in 2005, and the Navy already has 20 of those ships either in its fleet or under construction – 10 each of two different designs being built by two different contractors. Because those ships are assumed to have a service life of 25 years, the Navy would need to begin procuring their replacements in 2030. Therefore, the Navy plans to purchase 32 more LCSs through 2025 to complete its initial force of 52 ships and then to purchase 34 next-generation ships, called LCS(X)s, between 2030 and 2044 to replace the first-generation LCSs as they retire.
Both the Navy and CBO assumed that the LCS(X)s would have the capabilities of the Flight 0 ships they would be replacing rather than those of the later Flight 1 ships. The Navy’s cost estimate for an LCS(X) is $473 million, just slightly more (after adjusting for inflation) than the expected average cost of an LCS Flight 0. CBO estimates the average cost of the LCS(X) would be a little higher, about $500 million per ship. CBO’s current estimate is less than its estimate last year, when CBO assumed that the LCS(X) would look more like the proposed Flight 1. If the LCX(X) were designed to meet or exceed the capabilities of the LCS Flight 1, then its cost would probably be higher than the Navy and CBO now estimate.
Amphibious Warfare Ships
The Navy’s inventory goal for amphibious warfare ships is 33. The proposed force would consist of 11 LHA or LHD amphibious assault ships, 11 LPD amphibious transport docks, and 11 replacements for the Navy’s LSD dock landing ships. In pursuit of that force, the 2015 plan calls for buying 7 LHA-6s, at a rate of 1 every four or seven years, to replace LHD-1 class amphibious assault ships as they are retired.38 The plan envisions buying 11 LX(R)s (the replacement for LSDs), 1 every other year between 2020 and 2028 and then 1 per year until 2034, to replace existing dock landing ships in the LSD-41 and LSD-49 classes. Under the 2015 plan, the LX(R) would enter the fleet one year later than under the 2014 plan. (This is the third consecutive shipbuilding plan in which the Navy has delayed the start of the LSD replacement class by one year.) The 2015 plan would also start replacing the LPD-17 class with a new class in the early 2040s, buying one ship each in 2040, 2042, and 2044.
Based on the limited information available now, CBO estimates the cost of the LX(R) at an average of $1.8 billion per ship. CBO used the existing LPD-17 hull as the starting point for its estimate and then adjusted the ship’s size to reflect the reduced capability it expects for the LX(R). CBO’s estimate also accounts for the use of multiyear or block buy procurement authority in a potentially competitive environment. Various factors could cause the actual cost to be above or below the estimate. For example, it is not clear that the Navy would be able to conduct a full and open competition for the LX(R) in light of the fact that the yard currently building the LPD-17 class, Ingalls of Huntington-Ingalls Industries, would presumably enter the bidding with a significant advantage. The Navy might also have a limited ability to benefit from competition for the LX(R) if the Congress directed the Navy to ensure that all of the shipyards building the Navy’s ships received enough business to remain profitable. In contrast, if the Navy designs and builds the LX(R) in ways that are substantially different from the methods used for the LPD-17, then the cost of the new ships could be less than CBO estimates.